Libya Mulls Takeover of Verenex, Blocks China's Offer

According to a report by Dow Jones Newswires, a top Libyan oil official has claimed that Libya intends to exercise its first right of refusal and will lodge its own takeover bid for Canadian oil producer Verenex's assets. Libya's plan will block a $400 million offer to acquire Verenex from China National Petroleum Corp. (CNPC).

Shokri Ghanem, head of the Libyan National Oil Co. (NOC) told Dow Jones that the state-run company will pay the same amount as CNPC and that Libya is seeking Verenex's "commercial interest" as part of its effort to increase the North African country's oil production capacity to nearly 3 million barrels a day by 2013. Currently, Libya has an estimated 42 billion barrels in proven oil reserves.

"There are some formalities we are working out, but we are going to exercise our right to buy Verenex assets," Ghanem reported to Dow Jones.

The report noted that Verenex's primary asset is a 50% stake in an oil block located in Libya's hydrocarbon-rich Ghadames Basin, where the company has made 10 oil and gas discoveries to date.

In February, Calgary-based Verenex announced that CNPC agreed to purchase the company; however, a preemption clause has gridlocked the deal since it grants the Libyan government the right to acquire Verenex for its own portfolio.

Verenex issued a statement today in which the company said it could not confirm whether Libya plans to buy the company. Verenex and asset-hungry China are still awaiting Libya's official decision.